Raging Against Possible AIG Lawsuit; JPM Personnel Changes Continue - (www.americanbanker.com) Seriously, AIG?: We had a feeling the Internet was going to let out a collective groan once the news that AIG was considering a lawsuit against the federal government over its $182 billion bailout was picked up by news outlets and made the rounds on Twitter. (To summarize, the firm is being asked to join a suit originally launched by former CEO Maurice Greenberg, who claims the terms of the bailout were too harsh and deprived shareholders of billions of dollars.) And, oh, what a collective groan it was. "AIG, bailed out by U.S., may now sue U.S., claiming bailout terms were too harsh. We should counter-sue for stupidity," Berkeley professor and former U.S. Secretary of Labor Robert Reich tweeted with a link to an article from ABC news explaining the potential suit. "AIG considers suing government for bailing it out, world implodes in on itself," one Washington Post headline reads. Blogger Andrew Borowitz penned a satirical letter from AIG to the taxpayers for the New Yorker. (Sample line: "by suing … we are standing up for one of the most precious American rights of all: the right to sue someone who has just saved your life.") And David Weidner from MarketWatch goes so far as to suggest the government retaliate by charging AIG with treason.
Short sales in California surpass sales of foreclosed homes - (www.latimes.com) In recent months, short sales have surpassed sales of foreclosed homes in California for the first time since the start of the housing crash in 2007, data show. When housing prices first went off the cliff, most mortgage lenders refused to cut deals with homeowners, choosing instead to repossess homes on a grand scale. Five years and billions of dollars in losses later, many banks can't cut those deals fast enough, writing off large chunks of mortgage debt and even paying homeowners to move out. In recent months, short sales — in which banks allow homeowners to sell for less than they owe — have surpassed sales of foreclosed homes in California for the first time since the start of the housing crash in 2007, according to real estate research firm DataQuick. The transactions now represent about a quarter of the market, a surge driven by rising home prices, government crackdowns on foreclosures and banks' increasing capacity to process the deals.
Greek Banks to need more money for their recapitalization - (www.ekathimerini.com) Surprise, Surprise!!! The country’s main banks are considering requesting additional funds for their recapitalization. Senior bank officials say that the rapid deterioration in financial conditions caused by the back-to-back elections in mid-2012 has led to a greater increase in nonperforming loans than originally foreseen in the BlackRock report a year ago. They add that banks should proceed to greater share capital increases in order to respond to the new reality. Ernst & Young estimates that nonperforming loans in Greece approached 24 percent of all loans at the end of 2012.
Morgan Stanley Said to Cut 1,600 Investment-Banking Jobs - (www.bloomberg.com) Morgan Stanley, the sixth-largest U.S. bank by assets, plans to eliminate about 1,600 jobs from its investment bank and support staff in coming weeks, a person familiar with the matter said. The cuts total about 6 percent of the New York-based company’s institutional securities group, which includes investment banking and trading units, and support staff, the person said, asking not to be identified because the decision hasn’t been made public. About half the reductions will be in the U.S., the person said. Morgan Stanley reduced its staff by about 4,200 people in the first nine months of last year through job cuts and unit sales, after saying in December 2011 it would eliminate 1,600 jobs. Chief Executive Officer James Gorman, 54, has pledged to lower costs as return on equity remains below the bank’s cost of capital.
The California Social Contract (redux) - (www.ochousingnews.com) You fence-sitters are failing to fulfill your part of the California Social Contract. Your failure to continue buying homes is disrupting the social order, and it is causing those of us who bought before you psychological, emotional and financial damage. It is time for you to get off the fence and buy–NOW!!! In any social contract, you give up something personally for the greater good. When those of us who bought before you purchased our homes, we had to commit unrealistic percentages of our income to housing, lie on mortgage applications, and take out financing on unstable mortgage terms in order to do our part for the continuing social good. We made these sacrifices willingly because the benefits of maintaining the social contract are worth the price we paid.